Here is the "money quote" from Diania Choyleva of Lombard Street Research:
"A hard landing is already in progress."
Now in case you're having trouble seeing clearly, we'll write it again:
"A hard landing is already in progress."
What's a hard landing? In our terminology it just means that a country's central bank has over-printed money to a degree that the economy cannot absorb any more price-distortion and that the business and financial investments that were seen as sound yesterday are suddenly revealed as insolvent. This causes a panic. Stock markets crash. Investor equity is wiped out. Jobs are lost. Banks turn insolvent. A recession (or depression) swings into view.
Evans-Pritchard, of course, analyzes the unfolding downturn from a more measured perspective. He is perhaps the best mainstream financial reporter at the moment, or at least the most fearless, but he values his job (who can blame him?). Thus he presents his conclusions through the veil of socialism and Keynesianism that are taught at such fashionable Fabian schools as the London School of Economics.
This is why he can write that China has no "fiscal cushion" left. What he means is that China and other Asian countries (China is not alone) have already taken steps to raise interest rates and slow the amount of fiat money printing by their central banks. We would simply observe that the money manipulations of China's central bankers have failed and they are running out of time.
"China has actively sought to cool overheating," he writes, "alarmed by inflation above 6pc and price-to-income ratios for property in the rich coastal cities nearing wild extremes of 20. But it does not want the economy to jerk violently from boom to bust ..." ("It" being the old men who run the Chinese command-and-control financial system.)
According to a Chinese business publication, Caixin Magazine, regulators wish to reduce some US$150 billion in available credit. Yet, we learn from the Telegraph that any significant reduction in credit will have a serious impact on the liquidity of regional governments in China that have stored up some US$1.7 trillion of liabilities during China's latest building binge. The localities depend on land sales for 40pc of their income!
Worse ... "If we have a hard landing, the government is not going to be able to pay salaries," said Wang Jianlin, Dalian's biggest property developer. And what does Evans-Pritchard conclude? "What is clear is that if Europe and America fall back into recession, China will not be able to buttress the global economy a second time."
We have no quarrel with this, except for the assumption that Europe and America ever emerged from their "recessions" in the first place. The 2000s are looking more like the 1930s than the 1970s – a long slog from slump to slump, in other words, that was only alleviated by resetting the world's economic system after World War II.
We will end with the observation that it is harder and harder to conclude all of this is "zemblanity" (a kind of negative serendipity). We remember the George W. Bush years, when the US federal government began spending hundreds of billions on insane domestic programs ("No Child Left Behind") while funding trillions in expenditures for the wars in Iraq and Afghanistan.
The Bush and Obama administrations purposefully drove the US into a kind of economic depression while counterparts in Europe did the same thing. None of this is an "accident." It is all the result of deliberate policies, both in the EU and in America. Now China apparently teeters on the brink.
One can argue of course that Bush, Obama and the Eurocrats did not KNOW that their policies would result in the current mess. But one can also argue that the brightest men in the world – after some 100 years – did not realize that central banking inevitably collapses economies.
But how could they not know? How could they be so sure that central bank money printing guaranteed endless prosperity? It does not. History shows it does not. And now the old men of China are about to find this out as well.
Staff Report, The Daily Bell
We are suspicious, of course. We believe there is an Anglosphere power elite that wants to create world governance and will stop at nothing to do it. They control the central banks, the mainstream media and most of the world's national governments. We wonder if the idea is to drive the world into bankruptcy and depression, thus making desperate people malleable and willing to accept anything, even a globally united political and banking regime.
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